The shifts that 2020 brought as the pandemic challenged healthcare systems, livelihoods and wider economic activity have created opportunities for economies and businesses that can position themselves for the next normal. We believe this includes the Indian economy and Indian business.
From a macro perspective, India is poised to capitalise on the changes in the global supply chain. However, this will require a focused approach by the government and supportive schemes that can attract foreign capital.
From a micro perspective, we expect the emergence of new workspaces and new business models that combine work from home and office work. We are likely to see market leaders outperform challengers, including those in India’s ‘informal sector’ due to their inherent strength and ability to tackle the challenges.
Furthermore, the prevailing low interest rate regime is likely to augur well for business activity and provide an impetus to the housing sector. Finally, a greater focus on sustainability among Indian corporates could attract investors increasingly looking for companies that are more socially and environmentally conscious.
All these factors combined are likely to create a fertile environment for India’s recovery and growth.
Looking at Indian equities, we believe most sectors are now be better off compared to pre-pandemic levels. Base effects could make 2022 earnings growth look strong. Indications are for a broad recovery in earnings growth.
We see India’s long-term equity story as one of favourable demographics, increasing per-capita income and a growing middle class consuming more. Investment should kick-start as global and local growth momentum continues.
Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. The views expressed in this podcast do not in any way constitute investment advice.
The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns.
Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions).
Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.